Some of the biggest Hollywood stars are rushing to sell their ultra-luxury apartments ahead of April 1, when Los Angeles' new 'mansion tax' kicks off, The New York Times reported. Jim Carrey, Britney Spears and Kylie Jenner are among the celebrities who have put their sprawling properties on the market in recent months.
While Jim Carrey put his 12,700 square feet home for sale in February for US $29 million, Britney Spears put her 11,650 square foot home in Calabasas on the market for $12 million. Meanwhile, Kylie Jenner put her Beverly Hills home up for sale for more than US$33 million.
The race is now to lock in profits and close on a sale before the new tax takes effect.
''It's created a bit of a frenzy, with people trying to beat the April 1 date, and lots of opportunities for buyers looking for value,'' Tyrone McKillen, a broker with the luxury agency Official told NY Times.
What is the Mansion Tax?
According to the Independent, the tax, called Measure ULA, levied on high-value properties, will require sellers of properties of more than US $5 million to pay a four per cent transfer tax while sales of more than $10 million will pay a 5.5 per cent tax. The new tax is on top of the city's current 0.45% transfer tax. Also, in any case, the tax must be paid by the seller.
As per CNBC, the tax is levied based on the sale price, not profit, which means that sellers will have to pay up even if they're already taking a loss. One house owner, for instance, is willing to take a $6 million loss on their 16,700-square-foot home, just to beat the looming deadline.
The city is aiming to raise up to $1 billion from the sales of these luxury apartments, and the revenue will go towards public housing to address the homelessness crisis. The ULA tax was designed to ''fund affordable housing projects and provide resources to tenants at risk of homelessness,'' according to the city of Los Angeles website.
In 2022, an estimated 42,000 people were homeless, compared to 28,000 in 2016, according to figures from the Los Angeles Homeless Services Authority.
While the rich and affluent residents of the city have slammed the tax implementation, many civil liberty advocates see the bill as a positive step.
